Dissatisfied with the process by which The Walt Disney Co. selected a new CEO, former company chairman Roy E. Disney and business partner Stanley P. Gold today filed suit against the studio and certain members of the Board of Directors in Delaware Chancery Court. The suit alleges that the Board misled shareholders in order to get incumbent Board members re-elected at the 2005 meeting, and to keep Disney and Gold from running an alternate slate of directors.
In addition to The Walt Disney Co., the suit names incoming CEO Bob Iger, outgoing Mouse House topper Michael D. Eisner and Board members Judith L. Estrin, John S. Chen, Aylwin B. Lewis, Monica C. Lozano, George J. Mitchell and Leo J. O’Donovan. Gold and Disney accuse the defendants of fraud and breach of the duty of disclosure.
Following the announcement of Eisner’s decision to step down with the expiration of his contract, The Walt Disney Co. publicly announced a "bona fide" search for a new CEO. The suit claims, however, that the Board had only Iger in mind the whole time and failed to effectively consider external candidates. It also points to The Walt Disney Co.’s refusal to let Disney and Gold review books and records documenting the CEO search.
Disney and Gold are asking the court to void the 2005 directors election and hope to compel the company to hold another election for directors after full and fair disclosure of all material facts about the CEO selection process.